Aluminum Prices Break Through the 20,000 Mark Again as Spot Discounts Widen [SMM Spot Aluminum Midday Review]

Published: Jan 10, 2025 14:11

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[SMM Spot Aluminum Midday Review: Aluminum Prices Break Through the 20,000 Mark Again, Spot Discounts Widen]

This morning, the center of SHFE aluminum front-month contract once again broke through the 20,000 yuan/mt threshold. Some enterprises in east China have gradually entered the Chinese New Year holiday mode, leading to weakening demand. Previously, due to limited market arrivals and substitution between refined and scrap aluminum, inventory was reduced, boosting suppliers' confidence to stand firm on quotes. During the day, as aluminum prices surged, demand weakened further, and market discounts widened. SMM A00 aluminum ingot prices were at a discount of 40 yuan/mt to the SHFE 2501 contract, expanding by 10 yuan/mt from the previous trading day. SMM A00 aluminum ingot prices recorded 19,980 yuan/mt, up 310 yuan/mt from the previous trading day.

In the central China market, daily inventory in major warehouses decreased by 8,500 mt to 54,200 mt. With the full lifting of environmental protection measures and pre-holiday restocking by some small and medium-sized enterprises, spot aluminum circulation tightened. Traders who previously purchased at low prices began arbitrage sales after aluminum prices broke through 20,000 yuan/mt, offering discounts on premiums, but still below downstream psychological price levels, resulting in weak transactions. Today, the Henan-Shanghai price spread remained on par at a discount of around 40 yuan/mt. SMM central China A00 aluminum ingot prices recorded 19,940 yuan/mt against the SHFE 2501 contract, up 310 yuan/mt from the previous trading day. Actual market transactions were on par to a premium of 10 yuan/mt over SMM central China prices, down by approximately 30 yuan/mt from the previous trading day.

In terms of inventory, daily inventory in SMM's major aluminum consumption regions recorded 310,900 mt, down 14,900 mt WoW. In the short term, the inventory decline has bolstered traders' confidence to stand firm on quotes. However, with increased arrivals next week and deeper off-season effects, market consumption is expected to remain weak, outflows from warehouses will decline, and regional premiums and discounts will continue to weaken.

Data Source: SMM

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